13 terms

ENGR 112 Raising Capital


Terms in this set (...)

Entrepreneurial Finance Framework
Novelty of Business Model vs Capital to reach pos. cash flow
small businesses (personal credit; bank loans)
new tech (angel investors; venture capital)
capital-intensive, proven tech (commercial banks; project finance; strategic investors)
capital-intensive, new technologies (hard to fund w/out govt support
Financing Models
• Bootstrapping
• Debt Financing
• Equity Financing
• Seed & Early Stage
• 1st , 2nd , 3rd Rounds: Professional Investors
- VCs (Institutional)
• Strategic
- Later Stage / Growth Stage
• Private Equity
• Initial Public Offering (IPO)
High-Growth Venture Life Cycle
Seed, Startup, First Round, Second Round, Third Round, Expansion, Management Buyout, Work-out
Identify opportunitites and develop business model
Experiement to develop product; engage market
First Round
Launch first product; develop marketing, sales, and distribution
Second Round
penetrate initial markets; show ability to generate revenue
Third Round
Show steady increase in revenue; achieve profitability
establish privately held company, pursue aggressive growth
management buyout
operating management acquires business or division
troubled company with plan for turnaround
Structure of Venture Capital Fund
Pension Funds, Endowments, Wealthy Families (limited Partners)
Venture Capital Fund 1
Portfolio of Ventures
Initial PublicOffering (IPO)
• Transition of Private Company to a Public Company
• Shares of the company are sold to Institutional Investors (banks pension funds etc )
Used for:
• Raise expansion capital
• Monetize investments by early private investors